The production of new cars in the UK has fallen dramatically compared to last year’s figures.

According to the Society of Motor Manufacturers and Traders (SMMT), the number of new cars produced in the UK fell by more than half in March.

In the vehicle production figures announced today (24 April) by the SMMT, UK new car production fell by 51.3% in March to bring the first quarter volumes down 56.6%. The figure is a slight improvement on February’s record drop of 59%. The UK manufactured 61,829 cars in March.

Commercial vehicle production fell by 57.1% in March making the total drop for the first quarter 63%.

Total production including commercial vehicles in the first quarter in comparison to the same period last year has fallen by 57.4%.

Cars produced for export, which makes up a large part of total production, has also fallen significantly by 55%.

The car production sector has been hit hard by the credit crunch. Many manufacturers such as Toyota and Honda have experienced a drop in demand and have had to suspend production and downsize staff.

However, optimism has been renewed after the government announced the car scrappage scheme in Wednesday’s (22 April) 2009 Budget with hopes of stimulating the market.

Car scrappage schemes have already been adopted in other European countries such as Germany and France. Germany’s new car registrations have risen by 40% in March and by 10% in France after the implementation of the schemes.

The UK car scrappage scheme, which will run until March 2010, offers motorists an incentive to trade in cars older than ten years and purchase a brand new car with a £2,000 discount.

SMMT Chief Executive Paul Everitt said: “The figures show that urgent action is necessary to kick-start demand in the motor industry and the introduction of a UK scrappage incentive is an important first step.

“Efforts to restore confidence and improve access to finance, particularly for companies in the supply chain, are key to sustaining our industrial capability. The motor industry has an essential role in the UK’s economic future, but it will be some months before we see any significant increase in output.”